Emissions Credit Futures Contracts on the Chicago Board of Trade: Regional and Rational Challenges to the Right to PolluteBy Adam J. Rosenberg

INTRODUCTION

Despite clear support from such luminaries as Mr. Coase, the utility of the 1990 Clean Air Act Amendments' emissions credit trading program is not beyond dispute. The program has been criticized for its “somewhat breathtaking cheekiness,” as sounding “a little kooky” and as being “exotic.” Indeed, condemnation abounds in every direction, and some of the concerns are valid.

Notwithstanding its faults, however, the trading scheme provides important societal benefits that outweigh temporary costs and long-run uncertainties. The involvement of the Chicago Board of Trade (CBOT) and the effective regulatory power of the Commodity Futures Trading Commission (CFTC) are crucial to the success of such a trading program.

To highlight the desirability of the evolving emissions allowance market, this Note briefly analyzes the Act itself, the expected benefits of the trading program, the role and responsibilities of the CBOT and CFTC and current market development. Next, the Note looks at some of the criticisms of the program itself, particularly those focusing on regional concerns and barriers to implementation. Finally, the Note proposes a possible solution that addresses these concerns while retaining a smoothly functioning market and the integrity of the program.